What the National Insurance Increase Means for the UK Job Market

The UK government’s recent decision to increase National Insurance (NI) contributions is set to have a major impact on the job market, affecting employers, employees, and job seekers alike. Understanding these changes is crucial for anyone navigating the world of work right now.

What’s Changing?

From April, both employees and employers will see a rise in their National Insurance contributions. For workers, this means a bigger chunk of their wages will be deducted before they even see their pay packet. For employers, the cost of hiring and retaining staff will rise too, as they have to pay more NI for each employee on their books.

Immediate Impacts on Employers

The increase makes employing staff more expensive, particularly for small businesses still recovering from the challenges of the past few years. Some companies may:

• Slow down hiring to manage costs.

• Offer fewer permanent roles, instead increasing their reliance on temporary, freelance, or zero-hour contracts.

• Shift towards automation or outsourcing to avoid higher payroll costs.

• Be more cautious about salary rises or bonuses.

For businesses already operating on tight margins, the NI increase could push them to rethink their hiring strategies altogether.

How It Affects Job Seekers

For those looking for work, the job market might feel tighter. With businesses hesitant to expand their teams, job opportunities may become more competitive, especially in lower-paid or entry-level roles.

It also means that workers will feel the pinch in their take-home pay, making salary negotiations even more critical. Candidates may begin prioritising employers who offer strong benefits packages, flexible working, or opportunities for career progression — not just base salary.

Longer-Term Trends

While the short-term outlook might seem challenging, major shifts often create new opportunities. Sectors that are typically more resilient — such as healthcare, tech, logistics, and green energy — may still continue to grow. We could also see:

• More focus on productivity and skills development, as businesses invest in training to get more from leaner teams.

• A rise in self-employment and freelance work, as people seek ways to control their income.

• Regional shifts, as companies based outside London and the South East may offer more remote roles to attract talent while managing costs.

  
  

What Can You Do?

If you’re a job seeker:

• Upskill yourself to stay competitive.

• Be flexible — contract roles or part-time work could be a smart stepping stone.

• Negotiate carefully, considering the total value of a job offer, not just the salary.

If you’re an employer:

• Communicate clearly with your team about how you’re handling the changes.

• Look after your people — retention may become just as important as recruitment.

• Stay open to new ways of working to attract and retain top talent in a more cautious market.